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Enlarge ImageRequest to buy this photoRichard Drew | Associated PressThe Dow Jones industrial average reached a record on March 5, and the index climbed each trading day after — until Friday.

BOSTON — The Dow Jones industrial average is setting records, but average investors are still
proceeding with caution.

While they added to U.S. stock funds in the first two months of the year, they put larger
amounts into bond funds and funds that invest primarily in foreign stocks, according to mutual-fund
industry consultant Strategic Insight.

Investors recognize “that it’s necessary to spread one’s risk and wealth-creation aspiration
broadly and globally,” said Avi Nachmany, research director with the New York-based firm.

Net deposits into stock and bond mutual funds, both foreign and U.S., totaled $140 billion
through the first two months of 2013, the firm said last week. That matches the record total in the
first quarter of 2007. The year-to-date total for funds investing in U.S.-issued and foreign bonds
is $64 billion. For U.S. and foreign stock funds, the total is $44 billion.

In February, a net $6 billion was deposited into U.S. stock funds. Although that was down from
$26 billion in January, it was a shift from 2012, when withdrawals exceeded deposits over the final
10 months of the year. In fact, cash had been pulled out of U.S. stock funds for six years in a
row.

This year’s figures suggest that investors are beginning to become comfortable with stocks
again, after being shaken by the financial meltdown and market plunge of 2008-2009.

Deposits into stocks helped push the Dow toward a record reached on March 5. And the index
climbed each trading day after that — until Friday. The Standard & Poor’s 500 index has risen
9.4 percent this year, coming within a few points of its record.

Investors have been encouraged by strong fourth-quarter earnings reports, and by the Jan. 1
agreement between Congress and the White House to avert the worst effects of the so-called “fiscal
cliff.”

More details about how investors moved their money in February, according to Strategic
Insight:

Foreign-stock funds

Bond funds

A net deposit of $22 billion in February was down from$42 billion in January. Last month’s total
came mostly from taxable bond funds. Those funds, which primarily invest in corporate bonds,
attracted almost $20 billion. Nearly $3 billion was deposited into municipal bond funds, which
invest in bonds issued by state and local governments. Net deposits into bond funds have topped $1
trillion since the 2008 financial crisis, including more than $300 billion last year. Bonds
typically generate smaller long-term returns than stocks, but with less chance of short-term
losses.

Exchange-traded funds

Investors in February deposited a net $8 billion into ETFs, which bundle together investments in
a particular market index. That’s down from $30 billion in January. A net $2 billion was deposited
last month into ETFs investing in U.S. stocks, while a net $4 billion was added to foreign-stock
ETFs. An additional $1.5 billion was added to ETFs investing in bonds.

Unlike mutual funds, ETFs are traded just like stocks.ETFs have attracted more than $100 billion
in new cash in each of the past six years, growing at a faster pace than mutual funds. However,
mutual funds still have about seven times more assets than ETFs do.